Archive for May, 2007

May 31

Summer Coming a bit early and rates are starting to move.

Rates No Comments »

These late spring months are making it feel like summer is already here.  It’s another beautiful day to take the top down on those convertibles and let your hair down.  But what is happening to today’s interest rates? 

For the most part in the early part of this year rates weren’t moving to much staying in a general area and depending what you qualified for relatively low.   Things are changing – rates are starting to rise.  Not big jumps but definitely moving in the upward direction.  

What you need to do if you are in any of these situations: 

  • If you had to take a higher interest rate due to credit at the time you purchased or cashed out on your property take a look if you can fit into a more conventional rate and do it quickly while you can still save a lot of money. 

  • If you are in a Negative Amortization loan such as a COSI – COFI or any pick a payment loan.  If your long term plans are staying in the house – look into getting that rate fixed into a lower rate.  Most people don’t understand they might be making a payment from any where 1% – 4% but the actual rate of interest you are accruing is in the 8′s- call me and I will show you where to look on your mortgage documents.  I know because I just had one and by refinancing saved almost $1000 a month in negative amortization.  

  • If you are in an Adjustable Rate Mortgage and the term for it is going to be coming up in the next 12 to 24 months.  When things start to go up it is better to be safe then sorry. 

Please feel free to call or email me if you are in these situations or maybe you want to just discuss your current options.  Stay cool it’s going to be a hot one today. 

May 11

Purchasing Investment Property’s

Consumer Tips, Investment Property No Comments »

I received this great email and I know that this question comes across a lot… Please feel free to call me and ask me questions… Also keep in mind and go back to the handyman blog before this one – they both can be used together.

Hello Jeremiah. Hope you are doing well. I am hoping you can shed some light on some questions I have regarding loans for investment properties.How does one qualify for a second mortgage on an investment property? I hear that lenders rather have a property that is already rented to ensure cash flow or they require the real estate agent to write that the property has potential cash flow and that will be enough. Is this true? Can you just tell me what the general rule of thumb is to be a candidate for investment property loans?

Also, how does one go about purchasing properties under an incorporation? How is this better/worse or different than purchasing under your own name? Do you have a less or better chance of getting money lent to you?

I thank you for your anticipated insight. It is evident that I aspire to invest in real estate, but I am concerned about getting the financing to do it. Any information that you may have that may help that I didn’t ask above would be greatly appreciated. Thanks for your time.

Cecilia

 And here is my response:

Hi Cecilia -
 

A lot of good questions… I will try and pick each one apart for you…
 

If you went to purchase a property – there does not have to be tenants.  Part of an investment purchase appraisal is to tell me the lender how much money that the rent will be in the area the home is in.  They will take other comparables just like they do for appraising for the value.

Rule of Thumb: When I qualify you for the loan I am going to use 75% of the proposed rental income the appraiser comes up with as income to be applied to your bottom line income.  For Example: buying a single family home that brings in $1000 rent.  I will use $750 more to your already documented income to qualify for the home.  Making it so people who don’t they qualify can.

Purchasing under a corporation is really not an option.  It can be done but the amount of down payment is much greater then a regular mortgage.  Mortgages on residential homes need to be personally guaranteed; meaning that it is in your name and not under a corporation.  The best thing is to speak to your CPA or financial advisor when drawing up a new company and how you can put the weight of the liability solely on the corporation.  For example: writing the lease agreements in your company’s name would make the lease agreement between the tenant’s and the company – not the tenant’s and you personally. 

I have done a few of these personally feel free to call me and ask any more questions you may have.

Thank you,
Jeremiah Phillips
856-663-7800 Ext. 566
888-331-6300 Ext. 566 Toll Free
866-266-1966 EFax
609-760-9234 Cell
jphillips@firstmutualcorp.com